What is the fee for Cordova franchisees with 4 territories in year 6?
Cordova Franchise · 2025 FDDAnswer from 2025 FDD Document
e with the following schedule:
| Total | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Years 7 to 10 |
|---|---|---|---|---|---|---|---|
| Territories | |||||||
| 1 | $5,000 | $7,500 | $12,500 | $20,000 | $50,000 | $75,000 | $100,000 |
| 2 | $10,000 | $15,000 | $25,000 | $40,000 | $80,000 | $120,000 | $200,000 |
| 3 | $15,000 | $22,500 | $37,500 | $60,000 | $130,000 | $200,000 | $300,000 |
| 4 | $20,000 | $30,000 | $50,000 | $80,000 | $160,000 | $250,000 | $400,000 |
| 5 | $25,000 | $37,500 | $62,500 | $100,000 | $ |
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Cordova's 2025 Franchise Disclosure Document, the minimum quarterly royalty fee requirement for a franchisee with 4 territories in year 6 is $250,000. This fee is a component of the overall royalty structure, where franchisees pay 10% of their gross sales as a royalty fee. However, Cordova establishes minimum quarterly royalty fee requirements that franchisees must meet.
If a Cordova franchisee's royalty payments based on 10% of gross sales do not meet the minimum quarterly requirement, they must pay the difference as a supplemental royalty fee. This ensures that Cordova receives at least the minimum amount specified in the agreement. The minimum quarterly royalty fee requirement increases over the years, as shown in the table, potentially reflecting the expected growth and maturity of the franchise.
For a prospective Cordova franchisee, this means that even if their gross sales are low in a particular quarter, they are still obligated to pay the minimum quarterly royalty fee. This could pose a financial challenge, especially in the early years of operation when building a customer base. Franchisees should carefully consider their projected sales and ensure they can meet these minimum requirements to avoid incurring supplemental royalty fees.
It's important to note that this is just one of several fees outlined in Item 6 of the FDD. Franchisees should review all fees and payment terms to fully understand the financial obligations associated with operating a Cordova franchise.